Domestic Partner Benefits Tax Update

Tax Update for Employees with Same-Sex Domestic Partner Benefits

On July 26, 2013, the Internal Revenue Service announced that same-sex couples married in a jurisdiction that permits such marriages will be treated as married for federal tax purposes, even if they live in a jurisdiction that does not recognize such marriages. This would include pretax treatment of a same-sex spouse’s health insurance coverage. Although, the Ohio Constitution, Under Article XV §11 of the Ohio Constitution does not recognize marriage between persons of the same gender, this new ruling still applies. In other words, same-sex spouses would receive the same federal tax benefits as opposite-sex spouses.

In order for the University to withhold the appropriate tax, we need to update our records for our same-sex couples who are married. A marriage certificate will be required for verification. In the case where your marital status changed or will change in 2014 or later, you are required to notify the Benefit Department within 30 days of your status change.

If married, health insurance benefits for the same-sex spouse will be treated as pre-tax for federal taxes but will still be taxed for Ohio state taxes. This could have a significant difference in the net take home pay of some employees. In December 2013, the IRS also clarified that an employee’s same-sex spouse (or the spouse’s dependents) is permitted to be reimbursed from flexible spending accounts (Flex Save) incurred on or after the date of marriage as long as it occurred on or after the IRS ruling in July 26, 2013.

If you are married, please complete the attached Affidavit and return before February 28, so that we can have updated information for the appropriate tax withholding and adjust your 2013 W-2 before it is finalized with the IRS. If the marriage was in effect any time during 2013, you may be able to file for a tax refund.